Pakistan is a sovereign state, Dar tells IMF

Finance Minister Ishaq Dar has reiterated the coalition government’s resolve to overcome the financial crisis, 24NewsHD TV channel reported on Thursday.

He took a swipe at the last government for, what he called, going for political gimmickry to gain political mileage after ruing the national economy.

“The opposition is worried about why Pakistan is not defaulting. It wants Pakistan to become Sri Lanka before approaching the IMF. The last regime brought the country to the verge of collapse.

“However we cleared every payment last year. There is a shortage of capital in Pakistan. However, it has assets worth billions of dollars.

“Pakistan's debt is $130 billion. We have to focus on paying the debts. Currency is being smuggled from Pakistan and we have launched a crackdown on it. The State Bank of Pakistan has been made more autonomous.”

He deplored the amendments made to the State Bank of Pakistan Act by the previous government and described the move as aimed at creating 'a state within a state'.

“Geopolitics is happening against Pakistan so the country defaults,” he rued.

He added: “The government is thinking of lifting the ban on imports. By June 30, the ban on imports is expected to be lifted. We have satisfied the US with the purchase of oil from Russia. We can't buy oil from Iran as it has been facing sanctions, however, we can get electricity from Iran.

He continued: “The budget has not been made on the dictation of the IMF. The Fund has reservations about relaxing taxes. Talks with the IMF has not been abandoned. We are holding talks on our own terms. Previous payments have been cleared. The IMF wants more taxes.

“The external financing gap is $6 billion dollars. The current account deficit as of June 30 is $4 billion. 

"The IMF has promised $3 billion. Saudi Arabia will provide $2 billion and the UAE $1 while $ 1 billion dollars will come from the World Bank." 

Earlier, the IMF expressed reservations about the government’s ‘failure to broaden the tax base through the budget for the fiscal year 2023-24’

The finance minister said “Pakistan is a sovereign country and cannot accept everything from the IMF. Islamabad has the right to give some tax concessions.

 “We want to give employment opportunities to the youth through development in the IT sector. The government has set a target of achieving $15 billion in IT exports in the next five years.

“The amendments made to the State Bank Act are unsustainable,” he further added.

According to the finance minister, changes were made in the SBP’s governing laws but they are not complete yet.

Reportedly, IMF said Islamabad missed an opportunity to broaden the tax base and reduce tax expenditures as well as terms of tax amnesty against the fund’s programme conditionality.

" The draft FY24 budget misses an opportunity to broaden the tax base in a more progressive way, and the long list of new tax expenditures reduces further the fairness of the tax system and undercuts the resources needed for greater support for vulnerable BISP recipients and development spending," she said.